“The future of the European generic medicines industry is under serious threat, which places both the sustainability of European health care and the European industrial competitiveness at serious risk,” warned Mr Greg Perry, Director General of the European Generics medicines Association (EGA), at an EGA conference on healthcare sustainability on 31 March 2009 in Prague, Czech Republic.

Generic medicines account for nearly 50% of medicines dispensed in Europe, but less than 18% of pharmaceutical costs. Mr Perry stressed that whilst the European generic medicines industry is highly competitive, it is forced to operate in a highly uncompetitive environment. He welcomed the EU sector inquiry into the pharmaceutical industry that has identified unjustifiable anti-competitive factors operating against generic medicines. But he said other issues impacting the sustainability of the generics industry must also be resolved; these include dramatic government-forced price reductions, restrictive tendering systems, increasing regulatory costs, and the lack of EU national government measures to stimulate greater patient access to and use of generic medicines.

Professor Steven Simoens of the University of Leuven added that governments must focus on demand-side measures to promote greater use of generics rather than on price cutting, price setting and price tendering. “Further savings of 27-48% could be obtained through use of generic medicines and the affordable prices the industry could ensure through natural competitive forces.”

Mr Perry identified price tendering as the single most shortsighted instrument working against the long-term sustainability of EU healthcare systems. “Tendering schemes kill competition, do unimaginable damage to business and human resource planning, and threaten the security of medicines supply. These schemes provide short-term market access for only a limited range of products for a limited number of companies. No industry can operate long under such conditions.”

Noting IMS figures that show a sharp decrease in the growth of the generic medicines industry over the past two years, Mr Perry asserted that current trends are endangering the industry’s ability to invest in the development of new generic products and in incremental innovations such as improved formulations. They also threaten the future development of more affordable biosimilar and biopharmaceutical products. “At this rate I cannot see how policy makers can expect us to continue to meet healthcare expectations, let alone remain competitive in the global generic medicines markets while maintaining the 130,000 jobs our industry creates in Europe,” Mr Perry concluded.